US venture capital investors are eager to go green, according to new data released by Dow Jones VentureOne and Ernst & Young, which shows investors put USD892.6m to work in 71 deals fo
US venture capital investors are eager to go green, according to new data released by Dow Jones VentureOne and Ernst & Young, which shows investors put USD892.6m to work in 71 deals for clean technology companies in the US during the first six months of this year.
That marks a 70 per cent increase over the USD525.1m that was invested in 49 deals in the US in the same period of 2006. Factoring in Europe and China, global venture investment in clean technologies reached USD1.1bn in the first half of 2007.
‘Clean technology has moved from vision to reality, and it’s now a priority on the CEO agenda of every company from the entrepreneurial growth companies to the multinational market leaders,’ says Gil Forer, global director of Ernst & Young’s venture capital advisory group.
‘The accelerating venture capital investments reflect the growing importance of the sector. A strong innovation pipeline and confidence in the global drivers supporting growth in the clean technology market – such as government policies, consumer awareness, energy prices and concern about carbon emissions – are driving venture capital investment.’
Solar energy is the dominant investment segment in the US, accounting for 15 of the 26 deals and USD305m of the USD458m invested in the energy generation segment.
Since 2001, clean technology’s share of US venture investment has increased from 1.4 per cent in 2001 to 5.4 per cent in the first six months of this year. It has also enjoyed robust growth in Europe, with its share of overall investment growing from 1.6 per cent in 2001 to 4.4 per cent.
‘When a sector sees year-over-year investment growth of 70 per cent, and attracts more money than semiconductors in the US, you know it has truly arrived,’ says Jessica Canning, director of global research with Dow Jones VentureOne.
‘The premium placed on clean technology companies appears to be the driving force behind the continued surge in investment. With post valuations increasing by 163 per cent over the past three years, and liquidity events gaining traction, clean technology looks to gain momentum in the venture community.’
In terms of liquidity events, the US clean technology sector has seen USD187m raised so far in 2007 with the initial public offerings of Boston-based EnerNOC and East Hanover, New Jersey-based ComVerge, both of which offer energy management solutions. Three other clean technology companies – Imperium Renewables, Nanodynamics and Orion Lighting & Energy Services – are currently in IPO registration.
The median amount raised in venture financings by US clean technology companies climbed to USD7.55m in the first half and are set to top the USD7.5m round median in 2006. Valuations for clean technology companies were also at their highest level ever in the US with a pre-money median of USD30.5m. By comparison, the median pre-money valuation for other US technology companies during the first half was only USD17.6m.
However, overseas markets are not faring quite as well. In Europe, clean technology investments are holding steady with EUR63.9m invested in 19 deals during the first half, relatively unchanged from EUR69m in 18 deals over the same period of 2006. China recorded four deals in the first half, raising an estimated USD121m, down from USD146.5m in six deals during the first six months of 2006.
